Following the Security and Exchange Commission’s (SEC) decision to sue Binance and Coinbase, the Cosmos Hub is contemplating hiring a lawyer as a potential precaution. The move was partly prompted by the SEC naming the native token of Cosmos Hub, ATOM, as a security. In a draft proposal, a pseudonymous Cosmos community member, RoboMcGobo, expressed concerns that allegations in the Binance lawsuit could result in severe consequences for the Cosmos Hub and ATOM token.
The proposal emphasizes the need for the Cosmos Hub to consider hiring a lawyer or law firm capable of providing legal advice in worst-case scenarios. It argues that having an attorney on standby would better ensure that the Hub’s voice is heard in a case that could potentially decide its fate.
Cosmos community member Jacob Flowers mentioned that while the SEC may not have directly asked the court to prove ATOM or any other listed cryptocurrency as securities, part of its case against Binance will be to prove that the centralized exchange had sold securities. He stated that the SEC would have to prove that at least one of the cryptocurrencies they list is a security.
Although Flowers does not believe the Hub itself may need to find a lawyer, he suggested that the Interchain Foundation, which was involved in the initial creation of ATOM, could benefit from an evaluation by a securities attorney. However, concerns about centralization and regulatory issues arising from hiring a lawyer also surfaced.
Addressing these concerns, a community member under the pseudonym Lil_D acknowledged that while legal reviews and attorneys might be inefficient, they also provide additional security for projects. The member argued that exposure to potential enforcement actions would weaken the value proposition of ATOM and the Hub, far more than the potential value accrual of quickly expanding and breaking new ground.
The Cosmos Hub’s proposal to hire a lawyer is still in its draft stages and has not yet been put up for a community vote; the outcome will be closely watched by the community and the wider crypto market.
Source: Blockworks
